Banking News

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Santander takes 10% share of UK's saving accounts

01 October 2008 / by Rachael Stiles

Santander now holds 10 per cent of the UK's savings accounts, after taking on broken bank Bradford & Bingley.

With some deft manoeuvring, the Spanish bank, which owns Abbey, is now responsible for one in every 10 pounds in British savings accounts, adding B&B's £20billion of savings to its books in addition to the £20billion of savings it acquired when it bought out Alliance & Leicester last year.

Santander is now in third place in the UK savings market, behind Lloyds TSB and HBOS which are merging, and the Royal Bank of Scotland. As a result of its A&L takeover, it also holds 12 per cent of the UK mortgage market.

Through some nimble negotiations, holding off on talks with the Government about the extent of its B&B takeover, the group managed to acquire B&B's savings deposits without also having to take on its £41billion mortgage book, 85 per cent of which consists of high-risk buy-to-let and self-certification mortgages. Instead, the taxpayer has been forced to take on the leftovers.

Santander has a good track record for turning struggling banks around, such was the case with Abbey National, which it bought in a distressed purchase in 2004 and has now turned into a successful venture. Abbey chief executive, Antonio Horta-Osorio, has said that there are no plans to replace the B&B brand or close any of its branches.

As a result of its focus on retail banking, which accounts for the majority of its revenue, rather than relying on risky mortgage lending as many other banks have done in recent years, Santander is thought to be one of the few banks to have largely avoided the fall-out from the US sub prime mortgage crisis, which has brought writedowns and misery for a lot of other financial organisations.